Credit quality remained stable; no recorded provision for credit losses for the quarter.

Total non-interest expense of $129.5 million essentially flat compared to the second quarter; operating efficiency ratio – excluding MSR – remained below 70 percent for the third consecutive quarter.

Repurchased 551,519 shares of outstanding common stock at a weighted average price of $23.80.

On October 14, 2016, the Company announced an extension of its merger agreements with Central Community Corporation and Ouachita Bancshares Corp. until December 31, 2017.

The Company reported net income of $37.8 million, or $0.40 per diluted share, for the third quarter of 2016 compared with net income of $34.3 million, or $0.36 per diluted share, for the third quarter of 2015 and net income of $34.7 million, or $0.37 per diluted share, for the second quarter of 2016.

The Company reported net operating income – excluding MSR – of $36.7 million, or $0.39 per diluted share, for the third quarter of 2016 compared to $37.6 million, or $0.39 per diluted share, for the third quarter of 2015 and $37.2 million, or $0.39 per diluted share, for the second quarter of 2016.

"The recent merger agreement extensions with Central Community Corporation and Ouachita Bancshares Corp. were a positive step for our Company," remarked Dan Rollins, BancorpSouth Chairman and Chief Executive Officer. "While we are disappointed in the length of time taken to close these transactions, we are pleased with the continued commitment of these two organizations to being a part of our team.

"Our core financial results continue to improve quarter after quarter. We are extremely pleased with our front line efforts in producing deposit growth. We reported deposit growth of $225.7 million, or 7.9 percent annualized for the quarter. We have consistently communicated to our teammates the importance of leading our sales efforts with deposits. Our balance sheet growth contributed to meaningful growth in net interest income during the quarter. While we did see some slight compression in net interest margin, our loan yields and deposit costs were stable compared to the second quarter. The compression in the margin was driven primarily by balance sheet mix, as additional borrowings added to the balance sheet for liquidity purposes were deployed primarily in our securities portfolio.

"Otherwise, our story is very consistent with the last several quarters. Our mortgage team continues to grow and perform at a high level while our insurance team continues to battle pricing headwinds impacting the entire industry. There was no recorded provision for credit losses for the quarter as credit quality remains stable. Finally, total non-interest expense was essentially flat for the quarter, resulting in our efficiency ratio remaining below 70 percent."

Net Interest Revenue

Net interest revenue was $114.6 million for the third quarter of 2016, an increase of 3.2 percent from $111.1 million for the third quarter of 2015 and an increase of 2.0 percent from $112.3 million for the second quarter of 2016. The fully taxable equivalent net interest margin was 3.51 percent for the third quarter of 2016 compared to 3.59 percent for the third quarter of 2015 and 3.56 percent for the second quarter of 2016. Yields on loans and leases were 4.20 percent for the third quarter of 2016 compared with 4.22 percent for the third quarter of 2015 and 4.20 percent for the second quarter of 2016, while yields on total interest earning assets were 3.74 percent for the third quarter of 2016 compared with 3.82 percent for the third quarter of 2015 and 3.78 percent for the second quarter of 2016. The average cost of deposits was 0.22 percent for the third quarter of 2016 compared to 0.22 percent for the third quarter of 2015 and 0.21 percent for the second quarter of 2016.

Asset, Deposit and Loan Activity

Total assets were $14.6 billion at September 30, 2016 compared with $13.8 billion at September 30, 2015. Loans and leases, net of unearned income, were $10.7 billion at September 30, 2016 compared with $10.2 billion at September 30, 2015.

Total deposits were $11.6 billion at September 30, 2016 compared with $11.1 billion at September 30, 2015. Time deposits were essentially flat at September 30, 2016 compared to September 30, 2015, declining $13.2 million, or 0.7 percent. Over the same time period, interest bearing demand deposits increased $82.8 million or 1.7 percent while noninterest bearing demand deposits increased $254.9 million, or 8.4 percent and savings deposits increased $123.5 million, or 8.8 percent.

Provision for Credit Losses and Allowance for Credit Losses

Earnings for the quarter reflect no recorded provision for credit losses, compared to a negative provision of $3.0 million for the third quarter of 2015 and a provision of $2.0 million for the second quarter of 2016. Total non-performing assets ("NPAs") were $102.3 million, or 0.96 percent of net loans and leases, at September 30, 2016 compared with $113.9 million, or 1.11 percent of net loans and leases, at September 30, 2015, and $94.9 million, or 0.90 percent of net loans and leases, at June 30, 2016.

Net charge-offs for the third quarter of 2016 were $1.0 million, compared with net charge-offs of $2.3 million for the third quarter of 2015 and net charge-offs of $1.6 million for the second quarter of 2016. Gross charge-offs were $3.8 million for the third quarter of 2016, compared with $7.4 million for the third quarter of 2015 and $4.3 million for the second quarter of 2016. Gross recoveries of previously charged-off loans were $2.7 million for the third quarter of 2016, compared with $5.1 million for the third quarter of 2015 and $2.7 million for the second quarter of 2016. Annualized net charge-offs were 0.04 percent of average loans and leases for the third quarter of 2016, compared with annualized net charge-offs of 0.09 percent for the third quarter of 2015 and annualized net charge-offs of 0.06 percent for the second quarter of 2016.

Non-performing loans ("NPLs") were $90.9 million, or 0.85 percent of net loans and leases, at September 30, 2016, compared with $90.3 million, or 0.88 percent of net loans and leases, at September 30, 2015, and $80.2 million, or 0.76 percent of net loans and leases, at June 30, 2016. The allowance for credit losses was $125.9 million, or 1.18 percent of net loans and leases, at September 30, 2016, compared with $133.0 million, or 1.30 percent of net loans and leases, at September 30, 2015 and $126.9 million, or 1.20 percent of net loans and leases, at June 30, 2016.

NPLs at September 30, 2016 consisted primarily of $70.7 million of nonaccrual loans, compared with $68.6 million of nonaccrual loans at June 30, 2016. NPLs at September 30, 2016 also included $2.3 million of loans 90 days or more past due and still accruing, compared with $1.9 million of such loans at June 30, 2016, and included restructured loans still accruing of $17.9 million at September 30, 2016, compared with $9.7 million of such loans at June 30, 2016. Early stage past due loans, representing loans 30-89 days past due, totaled $46.7 million at September 30, 2016 compared to $31.9 million at June 30, 2016. Other real estate owned decreased $3.3 million to $11.4 million during the third quarter of 2016 from $14.7 million at June 30, 2016.

Noninterest Revenue

Noninterest revenue was $70.9 million for the third quarter of 2016, compared with $63.0 million for the third quarter of 2015 and $69.7 million for the second quarter of 2016. These results included a positive MSR valuation adjustment of $1.8 million for the third quarter of 2016 compared with a negative MSR valuation adjustment of $5.3 million for the third quarter of 2015 and a negative MSR valuation adjustment of $4.1 million for the second quarter of 2016. Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.

Excluding the MSR valuation adjustments, mortgage banking revenue was $10.5 million for the third quarter of 2016, compared with $7.6 million for the third quarter of 2015 and $13.1 million for the second quarter of 2016. Mortgage origination volume for the third quarter of 2016 was $478.2 million, compared with $402.2 million for the third quarter of 2015 and $462.6 million for the second quarter of 2016.

Credit and debit card fee revenue was $9.3 million for the third quarter of 2016, compared with $9.3 million for the third quarter of 2015 and $9.5 million for the second quarter of 2016. Deposit service charge revenue was $11.3 million for the third quarter of 2016, compared with $12.2 million for the third quarter of 2015 and $11.0 million for the second quarter of 2016. Insurance commission revenue was $28.2 million for the third quarter of 2016, compared with $28.6 million for the third quarter of 2015 and $28.8 million for the second quarter of 2016. Wealth management revenue was $5.3 million for the third quarter of 2016, compared with $5.6 million for the third quarter of 2015 and $5.3 million for the second quarter of 2016.

Noninterest Expense

Noninterest expense for the third quarter of 2016 was $129.5 million, compared with $126.5 million for the third quarter of 2015 and $128.7 million for the second quarter of 2016. Salaries and employee benefits expense was $82.1 million for the third quarter of 2016 compared to $81.4 million for the third quarter of 2015 and $81.8 million for the second quarter of 2016. Occupancy expense was $10.4 million for the third quarter of 2016, compared with $10.8 million for the third quarter of 2015 and $10.1 million for the second quarter of 2016. Other noninterest expense was $30.4 million for the third quarter of 2016, compared to $28.3 million for the third quarter of 2015 and $30.9 million for the second quarter of 2016.

Capital Management

The Company's equity capitalization is comprised entirely of common stock. BancorpSouth's ratio of shareholders' equity to assets was 11.80 percent at September 30, 2016, compared with 11.93 percent at September 30, 2015 and 12.12 percent at June 30, 2016. The ratio of tangible shareholders' equity to tangible assets was 9.86 percent at September 30, 2016, compared with 9.88 percent at September 30, 2015 and 10.11 percent at June 30, 2016.

Estimated regulatory capital ratios at September 30, 2016 were calculated in accordance with the Basel III capital framework. BancorpSouth is a "well capitalized" financial holding company, as defined by federal regulations, with Tier 1 risk-based capital of 12.32 percent at September 30, 2016 and total risk based capital of 13.37 percent, compared with required minimum levels of 8 percent and 10 percent, respectively, in order to qualify for "well capitalized" classification.

Transactions

On January 8, 2014, the Company announced the signing of a definitive merger agreement with Ouachita Bancshares Corp., parent company of Ouachita Independent Bank (collectively referred to as "OIB"), headquartered in Monroe, Louisiana, pursuant to which Ouachita Bancshares Corp. agreed to be merged with and into the Company. OIB operates 11 full-service banking offices along the I-20 corridor and has a loan production office in Madison, Mississippi. As of September 30, 2016, OIB, on a consolidated basis, reported total assets of $688.1 million, total loans of $494.8 million and total deposits of $574.7 million. Under the terms of the definitive agreement, the Company will issue approximately 3,675,000 shares of the Company's common stock plus $22.875 million in cash for all outstanding shares of Ouachita Bancshares Corp.'s capital stock, subject to certain conditions and potential adjustments. The merger has been unanimously approved by the Board of Directors of each company and was approved by Ouachita Bancshares Corp. shareholders on April 8, 2014. The most recent previous extension of the merger agreement expired on December 31, 2015; however, the Company and Ouachita Bancshares Corp. entered into a new extension effective on October 13, 2016, extending the merger agreement through December 31, 2017 to allow for additional time to obtain the necessary regulatory approvals and to satisfy all closing conditions. The merger agreement remains in effect until terminated by the Board of Directors of the Company or Ouachita Bancshares Corp. The terms of the agreement provide for a minimum total deal value of $111.1 million but also allow Ouachita Bancshares Corp. to terminate the agreement if the average closing price of the Company's common stock declines below a certain threshold prior to closing. The transaction is expected to close shortly after receiving all required regulatory approvals, although the Company can provide no assurance that the merger will close timely or at all.

On January 21, 2014, the Company announced the signing of a definitive merger agreement with Central Community Corporation, headquartered in Temple, Texas, pursuant to which Central Community Corporation agreed to be merged with and into the Company. Central Community Corporation is the parent company of First State Bank Central Texas ("First State Bank"), which is headquartered in Austin, Texas. First State Bank operates 31 full-service banking offices in central Texas. As of September 30, 2016, Central Community Corporation, on a consolidated basis, reported total assets of $1.4 billion, total loans of $619.3 million and total deposits of $1.1 billion. Under the terms of the definitive agreement, the Company will issue approximately 7,250,000 shares of the Company's common stock plus $28.5 million in cash for all outstanding shares of Central Community Corporation's capital stock, subject to certain conditions and potential adjustments. The merger has been unanimously approved by the Board of Directors of each company and was approved by Central Community Corporation shareholders on April 24, 2014. The most recent previous extension of the merger agreement expired on December 31, 2015; however, the Company and Central Community Corporation entered into a new extension effective on October 13, 2016, extending the merger agreement through December 31, 2017 to allow for additional time to obtain the necessary regulatory approvals and to satisfy all closing conditions. The merger agreement remains in effect until terminated by the Board of Directors of the Company or Central Community Corporation. The terms of the agreement provide for a minimum total deal value of $202.5 million but also allow Central Community Corporation to terminate the agreement if the average closing price of the Company's common stock declines below a certain threshold prior to closing. The transaction is expected to close shortly after receiving all required regulatory approvals, although the Company can provide no assurance that the merger will close timely or at all.

For the most recent information regarding the status of the merger with Ouachita Bancshares Corp. and the status of the merger with Central Community Corporation in our periodic reports, please refer to the Form 8-K that was previously filed with the SEC on October 14, 2016.

Summary

Rollins concluded, "Our teammates have positioned our Company where I believe we can continue on the same path we have been on for several quarters. We are growing our Company while holding expenses relatively flat. This approach should allow us to continue to show improved operating metrics as we move forward. I'm also pleased that we were able to utilize our share repurchase program during the quarter. We are committed to continuing to manage and deploy capital in a manner that maximizes value for our shareholders. Finally, I'm happy that our merger partners, Ouachita Bancshares Corp. and Central Community Corporation, further demonstrated their commitment to our proposed mergers through the extension of the merger agreements until the end of next year. I'm hopeful that we can resolve remaining regulatory concerns in a timely manner and move forward with those transactions."

Conference Call

BancorpSouth will conduct a conference call to discuss its third quarter 2016 results on October 20, 2016, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com. A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call.

About BancorpSouth, Inc.

BancorpSouth, Inc. (NYSE: BXS) is a financial holding company headquartered in Tupelo, Mississippi, with $14.6 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates 236 full service branch locations as well as additional mortgage, insurance, and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois. BancorpSouth is committed to a culture of respect, diversity, and inclusion in both its workplace and communities. To learn more, visit our Community Commitment page at www.bancorpsouth.com. Like us on Facebook; follow us on Twitter: @MyBXS; or connect with us through LinkedIn.

Forward-Looking Statements

Certain statements contained in this news release may not be based upon historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "could," "estimate," "expect," "foresee," "hope," "intend," "may," "might," "plan," "will," or "would" or future or conditional verb tenses and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to the terms, timing and closings of the proposed mergers with Ouachita Bancshares Corp. and Central Community Corporation, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its Bank Secrecy Act ("BSA") and anti-money laundering ("AML") compliance program and its fair lending compliance program, the Company's compliance with the consent order it entered into with the Consumer Financial Protection Bureau (the "CFPB") and the United States Department of Justice ("DOJ") related to the Company's fair lending practices (the "Consent Order"), the acceptance by customers of Ouachita Bancshares Corp. and Central Community Corporation of the Company's products and services if the proposed mergers close, the outcome of any instituted, pending or threatened material litigation, amortization expense for intangible assets, goodwill impairments, loan impairment, utilization of appraisals and inspections for real estate loans, maturity, renewal or extension of construction, acquisition and development loans, net interest revenue, fair value determinations, the amount of the Company's non-performing loans and leases, credit quality, credit losses, liquidity, off-balance sheet commitments and arrangements, valuation of mortgage servicing rights, allowance and provision for credit losses, early identification and resolution of credit issues, utilization of non-GAAP financial measures, the ability of the Company to collect all amounts due according to the contractual terms of loan agreements, the Company's reserve for losses from representation and warranty obligations, the Company's foreclosure process related to mortgage loans, the resolution of non-performing loans that are collaterally dependent, real estate values, fully-indexed interest rates, interest rate risk, interest rate sensitivity, calculation of economic value of equity, impaired loan charge-offs, diversification of the Company's revenue stream, liquidity needs and strategies, sources of funding, net interest margin, declaration and payment of dividends, cost saving initiatives, improvement in the Company's efficiencies, operating expense trends, future acquisitions and consideration to be used therefor, and the impact of certain claims and ongoing, pending or threatened litigation, administrative and investigatory matters.

The Company cautions readers not to place undue reliance on the forward-looking statements contained in this news release, in that actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors. These factors may include, but are not limited to, the Company's ability to operate its regulatory compliance programs consistent with federal, state and local laws, including its BSA/AML compliance program and its fair lending compliance program, the Company's ability to successfully implement and comply with the Consent Order, the ability of the Company, Ouachita Bancshares Corp. and Central Community Corporation to obtain regulatory approval of and close the proposed mergers, the willingness of Ouachita Bancshares Corp. and Central Community Corporation to proceed with the proposed mergers, the potential impact upon the Company of the delay in the closings of these proposed mergers, the impact of any ongoing, pending or threatened litigation, administrative and investigatory matters involving the Company, conditions in the financial markets and economic conditions generally, the adequacy of the Company's provision and allowance for credit losses to cover actual credit losses, the credit risk associated with real estate construction, acquisition and development loans, limitations on the Company's ability to declare and pay dividends, the availability of capital on favorable terms if and when needed, liquidity risk, governmental regulation, including the Dodd-Frank Act, and supervision of the Company's operations, the short-term and long-term impact of changes to banking capital standards on the Company's regulatory capital and liquidity, the impact of regulations on service charges on the Company's core deposit accounts, the susceptibility of the Company's business to local economic and environmental conditions, the soundness of other financial institutions, changes in interest rates, the impact of monetary policies and economic factors on the Company's ability to attract deposits or make loans, volatility in capital and credit markets, reputational risk, the impact of the loss of any key Company personnel, the impact of hurricanes or other adverse weather events, any requirement that the Company write down goodwill or other intangible assets, diversification in the types of financial services the Company offers, the Company's ability to adapt its products and services to evolving industry standards and consumer preferences, competition with other financial services companies, risks in connection with completed or potential acquisitions, the Company's growth strategy, interruptions or breaches in the Company's information system security, the failure of certain third-party vendors to perform, unfavorable ratings by rating agencies, dilution caused by the Company's issuance of any additional shares of its common stock to raise capital or acquire other banks, bank holding companies, financial holding companies and insurance agencies, other factors generally understood to affect the assets, business, cash flows, financial condition, liquidity, prospects and/or results of operations of financial services companies and other factors detailed from time to time in the Company's press and news releases, reports and other filings with the SEC. Forward-looking statements speak only as of the date that they were made, and, except as required by law, the Company does not undertake any obligation to update or revise forward-looking statements to reflect events or circumstances that occur after the date of this news release.

Management evaluates the Company's capital position and operating performance by utilizing certain financial measures not calculated in accordance with U.S. Generally Accepted Accounting Principles (GAAP), including net operating income, net operating income-excluding MSR, tangible shareholders' equity to tangible assets, return on tangible equity, operating return on tangible equity-excluding MSR, operating return on average assets-excluding MSR, operating return on average shareholders' equity-excluding MSR, tangible book value per share, operating earnings per share, operating earnings per share-excluding MSR, efficiency ratio (tax equivalent) and operating efficiency ratio-excluding MSR (tax equivalent). The Company has included these non-GAAP financial measures in this news release for the applicable periods presented. Management believes that the presentation of these non-GAAP financial measures (i) provides important supplemental information that contributes to a proper understanding of the Company's capital position and operating performance, (ii) enables a more complete understanding of factors and trends affecting the Company's business and (iii) allows investors to evaluate the Company's performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables below. These non-GAAP financial measures should not be considered as substitutes for GAAP financial measures, and the Company strongly encourages investors to review the GAAP financial measures included in this news release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this news release with other companies' non-GAAP financial measures having the same or similar names.

Reconciliation of Net Operating Income and Net Operating Income-Excluding MSR to Net Income:

Quarter ended

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

Net income

$ 37,817

$ 34,692

$ 22,549

$ 21,169

$ 34,343

Plus:

Merger expense, net of tax

-

1

1

8

5

Legal charge, net of tax

-

-

-

10,246

-

Regulatory related charges, net of tax

-

-

9,412

-

-

Less:

Security gains, net of tax

-

53

2

30

20

Net operating income

$ 37,817

$ 34,640

$ 31,960

$ 31,393

$ 34,328

Less:

MSR market value adjustment, net of tax

1,124

(2,537)

(4,931)

1,776

(3,291)

Net operating income-excluding MSR

$ 36,693

$ 37,177

$ 36,891

$ 29,617

$ 37,619

BancorpSouth, Inc.

Reconciliation of Non-GAAP Measures and Other Ratio Definitions

(Dollars in thousands, except per share amounts)

(Unaudited)

Reconciliation of Tangible Assets and Tangible Shareholders' Equity to

Total Assets and Total Shareholders' Equity:

Quarter ended

9/30/2016

6/30/2016

3/31/2016

12/31/2015

9/30/2015

Tangible assets

Total assets

$ 14,611,483

$ 14,137,160

$ 13,926,398

$ 13,798,662

$ 13,787,424

Less:

Goodwill

294,901

294,901

291,498

291,498

291,498

Other identifiable intangible assets

19,908

20,831

19,664

20,545

21,466

Total tangible assets

$ 14,296,674

$ 13,821,428

$ 13,615,236

$ 13,486,619

$ 13,474,460

Tangible shareholders' equity

Total shareholders' equity

$ 1,724,104

$ 1,713,043

$ 1,679,793

$ 1,655,444

$ 1,644,820

Less:

Goodwill

294,901

294,901

291,498

291,498

291,498

Other identifiable intangible assets

19,908

20,831

19,664

20,545

21,466

Total tangible shareholders' equity

$ 1,409,295

$ 1,397,311

$ 1,368,631

$ 1,343,401

$ 1,331,856

Total average assets

$ 14,366,759

$ 14,027,786

$ 13,851,661

$ 13,724,595

$ 13,632,581

Total common shares outstanding

94,074,740

94,546,091

94,438,626

94,162,728

93,969,994

Average shares outstanding-diluted

94,563,833

94,694,795

94,593,540

94,384,443

96,467,728

Tangible shareholders' equity to tangible assets (1)

9.86%

10.11%

10.05%

9.96%

9.88%

Return on tangible equity (2)

10.68%

9.99%

6.63%

6.25%

10.23%

Operating return on tangible equity-excluding MSR (3)

10.36%

10.70%

10.84%

8.75%

11.21%

Operating return on average assets-excluding MSR (4)

1.02%

1.07%

1.07%

0.86%

1.09%

Operating return on average shareholders' equity-excluding MSR (5)

8.49%

8.84%

8.89%

7.12%

8.88%

Tangible book value per share (6)

$ 14.98

$ 14.78

$ 14.49

$ 14.27

$ 14.17

Operating earnings per share (7)

$ 0.40

$ 0.37

$ 0.34

$ 0.33

$ 0.36

Operating earnings per share-excluding MSR (8)

$ 0.39

$ 0.39

$ 0.39

$ 0.31

$ 0.39

(1)

Tangible shareholders' equity to tangible assets is defined by the Company as total shareholders' equity less goodwill and other identifiable intangible assets, divided by the difference of total assets less goodwill and other identifiable intangible assets.

(2)

Return on tangible equity is defined by the Company as annualized net income divided by tangible shareholders' equity.

(3)

Operating return on tangible equity-excluding MSR is defined by the Company as annualized net operating income-excluding MSR divided by tangible shareholders' equity.

(4)

Operating return on average assets-excluding MSR is defined by the Company as annualized net operating income-excluding MSR divided by total average assets.

(5)

Operating return on average shareholders' equity-excluding MSR is defined by the Company as annualized net operating income-excluding MSR divided by average shareholders' equity.

(6)

Tangible book value per share is defined by the Company as tangible shareholders' equity divided by total common shares outstanding.

(7)

Operating earnings per share is defined by the Company as net operating income divided by average shares outstanding-diluted.

(8)

Operating earnings per share-excluding MSR is defined by the Company as net operating income-excluding MSR divided by average shares outstanding-diluted.

The efficiency ratio (tax equivalent) and the operating efficiency ratio-excluding MSR (tax equivalent) are supplemental financial measures utilized in management's internal evaluation of the Company's use of resources and are not defined under GAAP. The efficiency ratio (tax equivalent) is calculated by dividing total noninterest expense by total revenue, which includes net interest income plus noninterest income plus the tax equivalent adjustment. The operating efficiency ratio-excluding MSR (tax equivalent) excludes expense items otherwise disclosed as non-operating from total noninterest expense. In addition, the MSR valuation adjustment as well as securities gains and losses are excluded from total revenue.